Advances in Management and Applied Economics

Recession and Post-Recession Efficiency and Productivity Changes in United States Public Universities: The Good, Bad, and Ugly

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• Abstract

  This paper employs data envelopment analysis to investigate the extent to which publicly owned, operated, and managed universities in the United States have undergone efficiency and productivity changes in response to the financial crisis that induced the Great Recession and how post-recessionary conditions have altered those changes. The paper revisits an earlier study of like kind that used panel data covering the 2005-2008 academic years but could not, obviously, capture the dynamic changes of the 2007-2009 recession or the lingering post-recessionary financial and enrollment effects imposed on public universities. The present paper offers many improvements over that previous study by extending the panel data to 250 as compared to 133 universities and the academic years to evaluate efficiency and productivity to 2004-2013. Results indicate that university efficiency and productivity gains arose somewhat earlier during the recession than previous estimated but the significant improvements were in lagged response and arising in the 2010 and 2011 academic years. Post-recession results, however, show a bleaker picture with significant efficiency and productivity regress in both the 2012 and 2013 academic years. Without exception, productivity gains can be attributed to technological improvements with university managerial gains being of lesser value. Yet, the recent productivity declines do not bode well for the future implications of U.S. public universities, especially given the post-recessionary pressures on all publicly funded institutions to increase productivity.